Who is a state officer exempt from collection protection act?

Are private attorneys designated by Ohio as special counsel to collect debts state officers who are exempt from the Fair Debt Collection Practices Act, or are they debt collectors? Supreme Court oral arguments in Sheriff v. Gillie addressed that question, as well as the question of whether the special counsels’ use of the Ohio Attorney General’s letterhead on their demand letters could be a misrepresentation that violated the FDCPA.

According to the U.S. Court of Appeals for the Sixth Circuit, the state’s special counsel must comply with the FDCPA. They are not state officers, and the act did not violate principles of federalism by attempting to control the structure of Ohio state government. The appellate court also said that using the letterhead could misrepresent the special counsels’ authority and coerce consumers to make payments (see Gillie v. Law Office of Eric A. Jones, LLC, Banking and Finance Law Daily, May 11, 2015).

What is an officer? Ohio State Solicitor Eric Murphy focused much of his argument on convincing the Court that special counsel are officers of the state. As a starting point, he advocated that “the broadest conceivable definition should apply” because the purpose of exempting state officers from the act was to avoid interfering with government operations.

The FDCPA essentially drew a distinction between in-house debt collectors and third-party debt collectors, who are seen as more likely to engage in abusive practices. Ohio’s special counsel are supervised by the attorney general, which makes them akin to in-house collectors, Murphy told the Court.

However, he had difficulty responding to a point that had been important to the Sixth Circuit—the attorney general had, for all other purposes, made clear that special counsel are independent contractors. Independent contractors are not treated as officers in other contexts, Justice Sotomayor pointed out. Officers ordinarily are not defined by contract, she added.

Murphy also emphasized the importance to the state of special counsel activities. They collect a significant amount of debt, making them “vital to the fiscal health of the State.” While he did not explicitly invoke the concept of federalism, he did argue that subjecting the attorneys to the FDCPA would interfere with how Ohio carried on its business.

Misleading letterhead. When the special counsel used the attorney general’s letterhead, they did not falsely represent who issued the letter, Murphy also argued. They were sending out the letters in their official capacity as special counsel for the Attorney General, which was a truthful representation. That information actually was helpful to consumers, he added, because it told them how to raise concerns or questions about their treatment.

Why does it matter? Arguing on behalf of the consumer class that filed the suit, E. Joshua Rosenkranz of course took the opposite position, claiming that the attorneys’ contracts with the Attorney General made clear they were independent contractors, not state officers. The justices, however, had a somewhat different question in mind: why does it matter?

Justice Ginsburg first noted that there would be no violation if a special counsel opened a letter with a statement that he was writing on behalf of the attorney general, rather than using the attorney general’s letterhead.

Justice Kagan—who earlier had asked Murphy probing questions about what it took to create an officer—queried Rosenkranz about why there was a difference between such a statement in the letter’s text and the use of the letterhead. Both amounted to truthful statements that the special counsel was acting on behalf of the Attorney General, she observed. Later in Rosenkranz’s argument, Justice Kagan implied some acceptance of the idea that consumers could be benefitted by a clear connection between the special counsel and the attorney general that would bring about closer supervision.

Justice Alito then asked why a consumer would have different reactions to a letter sent by an assistant attorney general and a letter sent by a special counsel. Both letters would have truthfully asserted that the state was attempting to collect a debt owed to it.

Justice Breyer made clear that he needed to see something that was false or misleading before he could recognize a violation of the FDCPA, and he saw nothing misleading in the special counsels’ activities. He repeated the point more strongly during the U.S. government’s argument.

Officer v. independent contractor. Assistant U.S. Solicitor General Sarah E. Harrington was questioned by Chief Justice Roberts on her assertion that Ohio’s attorney general “has done everything possible to disclaim any inference that these people are part of the State government.” Noting that special counsel explicitly are authorized to the attorney general’s letter head, the Chief Justice observed “I can’t imagine anything they could do more dramatically to—to show that there is a connection than say ‘Here, use my letterhead.’”

Harrington did clarify, though, her position that the special counsel could be working for the attorney general without being part of the attorney general’s office.

Supreme Court docket. For details about this and other petitions and cases pending before the Supreme Court, please consult this list of selected banking and finance law cases awaiting action in the 2015 term. Issued opinions, granted petitions, pending petitions, and denied petitions are listed separately, along with a summary of the questions presented and the current status of each case.

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